OVERVIEW
Most retirees keep total housing costs at or below 25% to 30% of retirement income. That range comes from HUD’s 30% cost-burden threshold and the 28/36 rule lenders use for mortgage qualifying. Housing here means property taxes, insurance, utilities, maintenance, and any homeowners association fee, not just a mortgage. A 55+ community can bundle several of those costs into one predictable monthly figure.
Most retirees aim to keep total housing costs at or below 25% to 30% of retirement income, though the real answer depends on your income mix and whether you’re carrying a mortgage.
That benchmark comes from long-standing affordability rules built for working-age paychecks. Figuring out how much of your retirement budget should go to housing means adjusting that guidance for your actual retirement income rather than borrowing the old rule wholesale.
How Much of Your Retirement Budget Should Go to Housing?
Most retirees aim to keep total housing costs at or below about 25% to 30% of retirement income, leaving enough room for health care, food, and everyday life. That range comes from long-standing affordability benchmarks: HUD’s 30% threshold for housing “cost burden” and the similar 28/36 rule lenders use for mortgage qualifying.
These are reference points, not personalized rules. The right number for you depends on your income sources and whether a mortgage is part of the picture.
What Counts as a Housing Cost in Retirement?
Before you can hit a percentage target, you need an accurate picture of what “housing” actually includes. It’s more than just a mortgage or rent payment:
- Mortgage or rent, if either applies
- Property taxes, averaging $4,271 a year nationally in 2024, according to the National Association of Home Builders
- Homeowners insurance, averaging roughly $2,900 a year for $300,000 in dwelling coverage, with state averages ranging from under $800 to more than $8,000
- Utilities, averaging about $4,653 a year for households aged 65 to 74, according to the Federal Reserve Economic Data
- Maintenance, where a common guideline is about 1% of home value annually
- Homeowners association (HOA) fees, if you’re in a community that has them
For most retirees, the mortgage, if there is one at all, is the smallest part of the real picture.
Why the Math Changes Once You Retire
The 28/36 and 30% rules were designed around gross, pre-tax paycheck income. Retirement income doesn’t work that way. It’s a mix of Social Security, pensions, and portfolio withdrawals, which changes what that percentage is really measuring.
It also matters that most older homeowners aren’t carrying a mortgage at all. According to the Urban Institute, 38% of homeowners ages 65 to 74 and 30% of those 75 and older still carry a mortgage, meaning most in both groups own outright. That reshapes what the “housing” percentage needs to cover.
Related Article: Retirement Budgeting: How To Estimate the Cost of a Home in a 55+ Community
How to Size Housing to Your Own Income
Rather than borrowing a generic percentage, here’s a simple method to size the number to your own situation:
- Add up reliable monthly income. Start with Social Security, which the Social Security Administration puts at about $2,071 a month for the average retired worker in 2026, or $3,208 for an aged couple both receiving benefits, plus any pension or annuity income.
- Add a sustainable portfolio withdrawal. The classic guideline is the 4% rule, though Morningstar research points to a slightly more conservative fixed starting rate of 3.9%.
- Multiply your total monthly income by 0.25 to 0.30 to get your housing target, and keep a 10% to 20% buffer on top for health care costs and surprises.
As a worked example, if your total monthly income is about $4,000, your housing target is around $1,000 to $1,200 a month. This is general guidance, not personalized financial advice. A financial planner can help you apply it to your specific numbers.
How a 55+ Community Fits the Housing Budget
This is where an active adult community can actually simplify the math. A community HOA often bundles landscaping, exterior upkeep, and access to amenities into one predictable monthly fee. Instead of a mortgage payment, a separate maintenance fund, and a running list of upkeep costs, you’re looking at one number.
Right-sizing to a smaller, lower-maintenance home inside a community can also bring your housing share back under the 25% to 30% benchmark if it’s currently running high. For context, the national median existing-home price was about $440,600 as of June 2026, according to the National Association of Realtors. Costs vary widely by community and region, so it’s worth comparing real listings rather than relying on a single national number.
Ways to Bring Housing Under the Benchmark
If your housing costs are currently running above the benchmark, a few levers tend to move the number the most:
- Downsizing to a smaller, newer home, which can lower taxes, utilities, and upkeep all at once.
- Relocating to a lower-cost-of-living area or state.
- Paying down or avoiding a mortgage altogether, weighing the tradeoffs of paying cash versus financing.
Once you have a target number in mind, it’s worth exploring which communities and homes actually fit that budget. Real listings will tell you more than a national average ever can.
Related Article: Homebuying for Retirees: Should You Pay Cash or Get a Mortgage?
Frequently Asked Questions
What percentage of retirement income should go to housing?
Around 25% to 30% is a common target, based on long-standing affordability benchmarks. Use it as a reference point to check your budget, not a hard rule that applies to everyone.
Does the 30% rule apply to retirees?
The 30% figure comes from HUD’s cost-burden threshold, which is based on pre-tax working income. It’s still a useful sanity check in retirement, but you should base the number on your actual income mix rather than apply it exactly as-is.
What housing costs should I include in my retirement budget?
Taxes, insurance, utilities, maintenance, and HOA fees, plus a mortgage or rent payment only if you’re carrying one. Many retirees are surprised how much of the total comes from these non-mortgage costs.
Is it cheaper to live in a 55+ community?
It depends on the community, but an HOA can consolidate several cost categories into one predictable fee, and choosing a right-sized home can lower your overall housing spend. Costs vary enough by community that it’s worth comparing specific options.
Find a Home That Fits Your Retirement Budget
Once you know your target number, the next step is seeing which 55+ communities and homes actually fit it. Our team can help you compare real costs across communities and find one that works for your budget. Contact 55places.com today!
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